SRA to face trial over damages claim

The Solicitors Regulation Authority will face trial after the High Court dismissed its application to strike out a solicitor’s damages claim over an alleged breach of confidentiality.

The claim arose after the SRA became involved in a dispute between Alexis Maitland Hudson, whose firm Maitland Hudson has since closed down, and Peter Dempsey, the firm’s former money laundering reporting officer and compliance officer for finance and administration.

Before resigning Dempsey became concerned at how Maitland Hudson was conducting his practice and sent the SRA some computer files and hard copy documents, which the regulator later returned to Dempsey to assist him in his defence of a separate legal battle with Maitland Hudson.

After Maitland Hudson made a successful interim application for delivery up of the drives and documents from Dempsey, he brought a claim against the SRA seeking recoverable loss for the application on three causes of action relating to the breach of duty – conversion, equitable duty of confidence, and a common law duty to preserve confidentiality.

At a one-day hearing in April, the SRA sought a summary judgment under Civil Procedure Rule 24.2 arguing that its actions had not in law caused any loss. However, Chief Master Marsh dismissed the regulator’s arguments against all three causes of action and said Hudson had ‘a real prospect of success’ of recovering the losses at trial.

The judge decided that the test for causation in relation to the breach of an equitable duty of confidentiality was the general common law test, but called for a ‘full airing’ of this element of the claim at trial.

‘In the absence of authority in relation to the equitable duty, it is precisely the sort of point contemplated by the second limb of part 24. There is, in my judgment, a compelling reason why this element of the claim should receive a full airing at a trial, not because there are necessarily complex issues of fact but because a careful and full review of the legal principles is highly desirable.

‘In the course of the hearing before me, which lasted one court day, the vast preponderance of the time was spent dealing with the principles of causation in relation to a common law duty of care and I do not consider that this important aspect of the case has had the review it warrants.’

Matthew Rogers is a legal reporter at Solicitors Journal

matthew.rogers@solicitorsjournal.co.uk | @lex_progress